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Coca-Cola reported net sales revenues of $19.8 billion and cost of goods sold of $6.0 billion.Its gross profit percentage was:


A) 30.3%.
B) 69.7%.
C) 3.3%.
D) 2.3 %.

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A company sells goods on account at a selling price of $20,000.The cost of the goods is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:


A) $20,000 will be debited to Inventory and $20,000 will be credited to Accounts Receivable.
B) $20,000 will be debited to Cost of goods sold and $20,000 will be credited to Inventory.
C) $15,000 will be credited to Inventory and $15,000 will be credited to Sales.
D) $20,000 will be debited to Accounts receivable and $20,000 will be credited to Sales.

Correct Answer

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Use the information above to answer the following question.What was the unadjusted balance on the company's books?


A) $18,000
B) $17,230
C) $19,000
D) $20,270

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Merchandise was sold on credit for $3,000,terms 1/10,n/30.How should the seller record the cash collection?


A) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected within the discount period.
B) Debit Cash,$3,000,credit Accounts Receivable,$2,970,and credit Sales Discounts,$30,if collected within the discount period.
C) Debit Cash,$3,000,credit Accounts Receivable,$2,970,and credit Sales Discounts,$30,if collected after the discount period.
D) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected after the discount perioD. Merchandise was sold on credit for $3,000,terms 1/10,n/30.How should the seller record the cash collection? A) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected within the discount period. B) Debit Cash,$3,000,credit Accounts Receivable,$2,970,and credit Sales Discounts,$30,if collected within the discount period. C) Debit Cash,$3,000,credit Accounts Receivable,$2,970,and credit Sales Discounts,$30,if collected after the discount period. D) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected after the discount perioD.

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Use the above information to answer the following question.What is the amount of income before income taxes?


A) $9,500
B) $32,700
C) $13,000
D) $17,500

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A company is either a service company,a merchandising company,or a manufacturer,but cannot be more than one of these.

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The principles of internal control include which of the following?


A) Use only computerized systems.
B) Establish responsibilities.
C) Maintain perpetual inventory records.
D) Eliminate fraud.

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If a company that uses a perpetual inventory system sold merchandise which cost $1,000 for a selling price of $3,000,the accounting equation would show a:


A) net increase in assets and net increase in stockholders' equity.
B) net increase in assets and net decrease in liabilities.
C) net decrease in assets and net increase in liabilities.
D) net decrease in assets and net decrease in stockholders' equity.

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Use the information above to answer the following question.Income from operations for 2014 would be


A) $6,000.
B) $10,000.
C) $11,000.
D) $12,000.

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When a customer returns for credit a defective product it had purchased,the seller would record the transaction using which of the following accounts?


A) Purchase Returns and Allowances
B) Sales Returns and Allowances
C) Sales
D) Sales Discounts

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Use the information above to answer the following question.Net Income for 2014 would be


A) $8,000.
B) $9,000.
C) $10,000.
D) $14,000.

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Sales discounts are discounts that consumers get from buying clearance items at a reduced price.

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The gross profit equation is:


A) (Sales + Sales returns & allowances) - Cost of goods sold = Gross profit
B) (Sales + Sales discounts) - Cost of goods sold = Gross profit
C) (Sales - Sales returns & allowances - Sales discounts) - Cost of goods sold = Gross profit
D) (Sales - Sales returns & allowances - Sales discounts) + Cost of goods sold = Gross profit

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Which of the following statements regarding inventory counts is not true?


A) Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used.
B) A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold.
C) In a perpetual inventory system,the inventory count is compared to the inventory account balance to reveal shrinkage.
D) If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account,there must have been shrinkage.

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Thirty years ago,most companies relied mainly upon periodic inventory systems.Why?


A) Theft was an insignificant source of loss compared to today.
B) The tax code required physical inventory counts until tax regulations were changed in the 1980s.
C) New technology,allowing perpetual inventory systems to be installed more easily and inexpensively,was not available thirty years ago.
D) Before the advent of computers,perpetual systems were less accurate than periodic systems.

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Under the periodic inventory system:


A) inventory records are updated immediately after each purchase.
B) inventory must be counted at the end of each accounting period.
C) inventory does not have to be counted.(It can be taken from the accounting records. )
D) inventory levels must be counted every day.

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On a bank reconciliation,the amount of an unrecorded bank service charge is


A) added to the bank balance of cash.
B) added to the company's balance of cash.
C) deducted from the bank balance of cash.
D) deducted from the company's balance of cash.

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A highly effective internal control should not be implemented if the cost is greater than the benefit.

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When a company collects from a customer who pays within the discount period,the company:


A) debits a contra-revenue account.
B) debits a liability account.
C) credits a liability account.
D) debits a revenue account.

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The Tuck Shop began the current month with inventory costing $10,000,then purchased inventory at a cost of $35,000.The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000.If an inventory count shows that inventory costing $14,500 is actually on hand at month-end,what amount of shrinkage occurred during the month?


A) $500.
B) $5,000.
C) $14,495.
D) $15,000.

Correct Answer

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